A nation crushed by rising cost of living
L Spike in petrol prices the latest blow l Nominal take-home pay declining l Households hit by rocketing rate hikes
THE cost of living crisis continues to crush ordinary South Africans, with data from the latest BankservAfrica Takehome Pay Index (BTPI) showing that life became more expensive for salaried workers in March.
BankservAfrica’s head of Stakeholder Engagements, Shergeran Naidoo, said salaries measured in the BTPI had been disappointing over the last 12 months.
Naidoo said: “Consumer inflation reached a 13-year high of 6.9% in 2022, resulting in a notable erosion of the purchasing power of households.”
He said the average nominal takehome pay in March had declined on a monthly basis to R15 321.
Independent economist Elize Kruger said: “With inflation remaining elevated for longer than hoped, and little indication of a notably different economic environment in 2023, salary adjustments and the job market will likely remain lacklustre this year.”
This latest blow comes on top of workers already being squeezed by food inflation and higher fuel, transport and electricity costs.
Food and non-alcoholic beverages and transport were the main drivers behind the 1% monthly change in the consumer price index.
Statistics SA called it “the most significant monthly rise since July 2022 when it was 1.5%”.
The Department of Mineral Resources and Energy announced yesterday that the price of both grades of petrol would increase by 37 cents per litre from today.
However, 500ppm diesel is set to dip by 73c per litre, while the cleaner 50ppm diesel will see a smaller decrease of 47c.
Illuminating paraffin is set to come down by 33c per litre.
The price adjustment means a litre of 95 unleaded will now retail for R22.62 at the coast and R23.34 in the inland regions, where the less expensive 93 unleaded will now cost R23.01.
The wholesale price of 500ppm diesel will now be R19.43 at the coast and R20.15 inland, while 50ppm is listed at R19.79 and R20.50 respectively.
Meanwhile, rising interest rates are affecting homeowners and triggering home sales, forcing previously proud homeowners back into the rental market.
The latest FNB Property Barometer, which reflects data for the first three months of 2023, shows that 17% of property sales across all values are due to financial pressure.
Lew Geffen Sotheby’s International Realty chief executive, Yael Geffen, said the impact of ongoing interest rate hikes as well as the spiralling cost of living and high fuel price on consumers was significant, especially in the housing market, which has been under pressure for some time.
“We are definitely seeing an increase in distressed sales by homeowners who are no longer able to service their debt and are forced to sell, which is heartbreaking.”
Geffen said that this was happening across the board in all sectors, but it was most prevalent at the lower end of the market.
“Because nobody is getting salary increases that can accommodate R5 500 worth of monthly mortgage repayment hikes in 18 months, which is the case for every household in the country right now servicing a R2 million bond,” Geffen said.
She said the sharply rising cost of living and spiralling repo rate was definitely impacting the rental market in a number of ways: people are taking longer to save their deposits to buy and are renting properties for longer.
“Some people can simply no longer afford to buy a home and homeowners under financial pressure are forced to sell and then rent.”
South Africa has more than 12 million unemployed people, with 75% of those employed earning below R5 800 a month, and the ongoing power cuts have crippled any prospects of creating more jobs.
The April 2023 Household Affordability Index compiled by the Pietermaritzburg Economic Justice and Dignity (PMBEJD) group showed that the average price of a household food basket was more than R5 000 in April.
The PMBEJD said their calculations, using Pietermaritzburg-based figures for electricity and transport, and the average figure for a minimum nutritional basket of food for a family of four, puts electricity and transport taking up 58.2% of a worker’s wage, in the R2 011.50 to R3 457.12 income bracket.
PMBEJD co-ordinator Mervyn Abrahams said in an eNCA interview: “Food is bought after money for transport and electricity have been paid for or set aside, leaving only R1 445.62 – for food and everything else.
“In this scenario, there is no possibility of a worker being able to afford enough nutritious food for her family.”